What do do about that thumb rust spot on the breech that you looked over cleaning and oiling after shooting? No rust anywhere else but there and right where you use your thumb or finger to seat a pellet.
What would be the best way to clean it with out damaging the o-ring?
As just stated or at least implied, a CAREFUL removal and replacement of the O-ring should do you well for that part of the operation. Since the shape of the seal can become 'biased' or wedge-shaped based on how and where the breech and receiver meet, I like to mark a breech seal with a little dot of Wite-Out at 12 O'clock (aka 'top dead center') before removal so I can reinstall it in the exact same position.
I have found a dental pick or small jewelers screwdriver a good tool for gently prying the seal out of the slot, doing so a little at a time at various points around its perimeter so I don't damage the seal.
Since the rust bothers you, and it appears from here that the flat steel area at the breech was not blued at the factory, applying some cold bluing after removing any rust with steel wool as suggested should provide additional protection. After applying the cold bluing, oil it with a small dab of good gun oil (I like Remoil or Birchwood Casey Barricade, but favorites tend to vary). That should better prevent the rust from reappearing than if you left the area un-blued as it seems to be in your photo.
your eyes are better than mine on the rust but as stated 4 O wool will fix what I don't see and maybe a new breech seal would be in order and a sewing needle work in taking out breech seal, just pock it in the side
Yep, I forgot about the needle approach--also a suitable tool for the job. I prefer a larger diameter needle so it doesn't sink into the seal too far and tear it up, but, rather, the end penetrates just far enough to give you the leverage you need against the outer, flat metal area to pry the seal out of the groove/slot.